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Agricorp presents… AgriStability Video Shorts                          

Understanding elements of the program.                          

This video short focuses on…                          

  • Allowable income
  • Allowable expenses

AgriStability protects you when your net income falls below 70% of your recent average income.                          

Allowable income and allowable expenses are directly related to agriculture production. This is so the program works as intended. Supporting farmers when disasters affect their bottom line.                          

Income and expenses not directly related to agriculture production are non-allowable under AgriStability, like…                          

  • Building and machinery repairs
  • Investment income
  • Capital expenses
  • Rent
  • Interest

So what is allowable income under AgriStability? Things like…                          

  • The sale of agriculture commodities
  • Production Insurance payments

So what is an allowable expense under AgriStability? Things like…                          

  • Feed
  • Seed
  • Fertilizers and soil supplements
  • Pesticides and chemical treatments
  • Containers and twine
  • Heating fuel
  • Electricity
  • Freight and shipping
  • Arm’s length salaries
  • Storage and drying
  • Fuel for machinery

Farming is a complex business.                          

Every farm is unique                          

For questions specific to your farm, contact Agricorp and read the AgriStability publications on agricorp.com.                          

We’re here to help.                          


Transcript

Agricorp presents… AgriStability Video Shorts                       

Understanding elements of the program                       

This video short focuses on Production margin and Reference margin                       

In general terms, AgriStability protects you when your net income falls below 70% of your recent average income.                       

In AgriStability terms:                       

  • your net income in a year is your Production Margin
  • your average net income is your Reference Margin

Production Margin and Reference Margin are terms unique to AgriStability.                       

Knowing them can help you better understand the program.                       

Let's replace general terms with AgriStability terms: AgriStability protects you when your net income Production Margin falls below 70% of your recent average income                       

Reference Margin                       

Now we’ll take a look at how these margins are calculated                       

What is a Production Margin based on? Allowable income minus allowable expenses                       

A single year's business information                       

Tax information                       

Info you submit on AgriStability forms                       

Your inventory adjustments (ending minus opening)                       

How is the Production Margin calculated?                       

Let's use the 2023 program year as an example:                       

2023 allowable income
- (2023 allowable expenses)
+ 2023 inventory adjustments
= 2023 Production Margin

So what is a reference margin based on?                       

Before we get into that, remember...                       

AgriStability protects you when your Production Margin falls below 70% of your Reference Margin                       

So what is a Reference Margin based on?                       

(Example)                       

  • Your 5 most recent years
  • The corresponding Production Margin
  • The low and high values removed
  • An average of the remaining numbers
  • This is called an Olympic average

New to farming?                       

Years of farming Your Reference Margin is based on
3-5 Your last 3 Production Margins
Less than 3 Industry averages

Those are the basics on Production Margin and Reference Margin                       

But how are they used in AgriStability to quantify a loss?                       

Watch our video on how payments are calculated.                       

Farming is a complex business.                       

Every farm is unique.                       

For questions specific to your farm, contact Agricorp and read the AgriStability publications on agricorp.com                       

We’re here to help                       


Transcript

Agricorp presents….AgriStability Video Shorts                    

Understanding elements of the program                    

This video short focuses on How payments are calculated                    

AgriStability protects you when your net income falls below 70% of your recent average income                    

So how are payments calculated? It's simpler than you might think                    

But before we get into that, it's good to know AgriStability actually works a lot like other insurance you may have                    

  • You insure something valuable
  • you have a coverage level or deductible
  • and you get a payment if a loss triggers it.

What's unique about AgriStability?                    

Instead of covering 1 commodity at a time, AgriStability helps cover income loss of the whole farm, when disasters happen.                    

When you compare AgriStability to another program you may know, Production Insurance you'll see they share the same insurance basics.                    

Now that we see AgriStability works a lot like other insurance, let’s get back to our original question…                    

How do payments work?                    

What you’re insuring is your average net income (reference margin)                    

  • Your coverage level is 70%
  • When shortfalls trigger payments
  • Your payment trigger is your coverage level
  • You have this year’s net income (production margin)
  • And an income shortfall (margin decline)
  • Your payment is your shortfall x the compensation rate

The compensation rate is 10% higher!                    

Sidebar: if you know Production Insurance                    

Showing the same insurance basics at work                    

What you’re insuring is your average yield                    

Suppose you have a coverage level of 70%                    

When shortfalls trigger payments                    

You have a payment trigger (guaranteed production)                    

If this year’s yield has a yield shortfall, your payment is your shortfall x the claim price                    

Let's add example numbers                    

Average net income: $200,000                    

Payment trigger: $140,000                    

This year's net income: $100,000                    

Net income shortfall: $40,000                    

$40,000 shortfall X                    

80% compensation rate                    

Payment of $32,000                    

Starting with the 2023 program year, the government increased the compensation rate to 80%                    

So that’s how payments are calculated and how AgriStability can help protect your farm's income                    

Farming is a complex business                    

Every farm is unique                    

For questions specific to your farm, contact Agricorp...                    

and read the AgriStability publications on agricorp.com                     

We’re here to help                    


​​​​​​AgriStability Program Guidelines

The AgriStability Program Guidelines are the main set of rules for the program. Where there is any conflict between the AgriStability Program Guidelines and the other materials listed below, the AgriStability Program Guidelines take precedence.

Information sheets

Technical Information Circulars

The  Technical Information Circulars (TICs) provide direction on how to apply program rules within Ontario’s unique circumstances. OMAFRA​ provides new and updated TICs to Agricorp as required.

RC 4060

Ontario producers should use the RC4060​ Farming Income and the AgriStability and AgriInvest Programs Guide when they complete their T1163 (individuals) or Statement A (corporations, trusts and special individuals). This guide also includes the commodity and program payment codes that you should use on your T1163 or Statement A forms.

Fair Market Values (FMV)

Agricorp uses FMVs to value all crop and livestock inventory, provided they are reasonable for your operation.

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